Federal legislation to lower property insurance costs debated

Legislation that could give South Florida homeowners a break from soaring property insurance premiums received a mixed reception by federal lawmakers Wednesday.

The House Financial Services Committee debated the bill and is expected to vote on it in the next few months. The bill sponsored by Rep. Ron Klein, D-Boca Raton would expand the federal government's role in providing disaster insurance coverage and supporting state-backed catastrophe coverage. It's backed by 73 co-sponsors in more than 30 states, including most lawmakers representing Florida.

Klein said the bill would essentially solve the state's property insurance crisis. Critics including some major environmental and insurance industry trade groups say it could further displace the private market, potentially force taxpayers to help pay claims and encourage people to continue building in disaster-prone areas.

"My constituents have seen their insurance premiums increase dramatically every summer storm or no stormsome insurance companies have been cherry-picking their customers," Klein said. "That is simply wrong, and the time for change is now."

A representative from ProtectingAmerica.org a coaltion of about 300 groups including the American Red Cross, State Farm and Allstate voiced support for the legislation.

"With headlines around the world relaying stories from the recent tragedies in both Haiti, Chile and on Monday, Turkey, many here at home are taking a harder look at whether or not we would be prepared if a similar catastrophic event were to happen" here, said James Witt, a co-chairman of the group and a former FEMA director. "A catastrophic event, whether an earthquake striking one of our great American cities, or a massive hurricane making landfall near any of the metropolitan areas from New York to Houston, would cause such enormous damage that our economy would be stunned."

But critics said taxpayers should not subsidize a program that would mainly help Florida and California. Rep. Jeb Hensarling of Texas said the federal government is in no position to help.

"Our country is on the road to bankruptcy," he said. "We have gone from bank bailouts to beach condo bailouts."

Steve Ellis, of Taxpayers for Common Sense, said Florida's state-backed property insurance programs represent what could go wrong with a national insurance program. He said incorrectly that the Florida Hurricane Catastrophe Fund, which provides insurers with back up coverage only has $4 billion in assets and would have a $20 billion shortfall if a major hurricane struck.

In reality, the castastrophe fund has $18 to $19 billion in claims-paying capacity. Jack Nicholson, the chief operating officer of the fund, recently said the fund has $9.5 billion in assets including $6 billion in the bank and $3.5 billion that is borrowed and another $7.5 billion that it can borrow.